Robert Goodman Accountants Blog

The Reportable Tax Position schedule was first introduced in 2012 as a way for the ATO to keep an eye on contestable or material tax positions taken by public and multinational companies. Its recent proposal to expand the schedule to large private companies and corporate tax groups has experienced pushback from various stakeholders. As a result, the ATO is now consulting with industry groups and advisers to co-design the schedule with a view to implement it in 2020-21 financial year.

The expansion of the Reportable Tax Position (RTP) schedule to large private companies and corporate tax groups have been shelved by the Tax Office until the 2020-21 financial year (ie 1 July 2020) amid pushback from various stakeholders over the lack of clarity surrounding its practical implementation. The ATO notes it is now working with industry groups and advisers from the private groups market to co-design the RTP schedule for implementation.

The RTP schedule was first introduced in 2012 and only applied to the top 100 public and multinational companies. By 2018, it had been expanded to all public and multinational companies with a total business income exceeding $25m that are part of an economic group with total business income of greater than $250m.

The actual schedule is designed to provide a mechanism for taxpayers to disclose their most contestable and material tax positions to the ATO and inform it about areas of tax law that may require further clarification or certainty.

According to the ATO, the schedule allows it to tailor its engagement and work with the companies or groups on complex high-risk arrangements and to better understand the tax risks for those taxpayers. Conversely, it also allows the companies or groups involved to make informed decisions about their tax positions or potential tax positions that are considered to be high risk arrangements.

The specific types of disclosures required by the schedule is divided into 3 categories:

  • Category A: tax uncertainty reflected in the taxpayer's income tax return – where a position that is argued is about likely to be correct as incorrect, or less likely to be correct than incorrect (similar to reasonably arguable position which applies generally to all taxpayers).
  • Category B: tax uncertainty reflected in financial statements – where uncertainty about taxes payable or recoverable is recognised/disclosed in the taxpayer or related party's financial statements.
  • Category C: specific risks and issues – based on public advice and guidance including Taxpayer Alerts, practical compliance guidelines and observations in compliance products.

Considering the advantage of early intervention for risky arrangements, it is clear to see why the ATO would want to apply the schedule to as many companies or groups as possible, whether they be private or public. As initially proposed, the RTP schedule expansion would've applied to all companies with a total business income exceeding $25m that are part of an economic group with total business income of greater than $250m. It would've included standalone companies with total business income in excess of $250m and would not have included trusts or individuals.

Therefore, the expansion would've been aligned with the requirements for public and multinational companies, and according to the ATO, create a level playing field among large corporate groups by ensuring all large businesses have the same obligation to disclose their most contestable and material tax positions, regardless of whether they are public or private. The ATO may eventually have ambitions to slowly expand the RTP schedule to all entities or lower the income threshold, but for now, it only impacts the very large end of town.

How does this affect me?

If you're involved in a large private company or corporate group, we can help you work out whether you'll need to lodge RTP schedules going forward. If you're a smaller company or an individual and have taken an uncertain position in your tax return, we can help you figure out whether that position is reasonably arguable. Contact us today.

IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.  

Expansion of tax avoidance taskforce

The ATO has expanded the tax avoidance taskforce to include top 500 private groups, high wealth private groups, and medium and emerging private groups. Perhaps the most interesting is the inclusion of medium and emerging private groups which cover around 97% of the total private group population. These consist of Australian resident individuals who, together with their associates, control wealth between $5m and $50m, and businesses with an annual turnover of more than $10m. Business captured will be receive a notification letter of the next steps.

The Tax Avoidance Taskforce has recently been expanded by the ATO to private groups and high wealth individuals. Originally conceived in 2016 to ensure that multinational enterprises, large public and private business pay the right amount of tax, this has now been extended to cover more taxpayers.

The taskforce's main role is to investigate what the ATO consider to be aggressive tax avoidance arrangements including profit shifting, and work with partner agencies in other jurisdictions to achieve this goal. In the 2019-20 Federal Budget, the taskforce was provided with $1bn over 4 years – this is in addition to the $679m provided in 2016 – to extend the operation of the taskforce to the 2022-23 income year and expand the range of entities it investigates.

As a part of the expansion, the ATO now has 3 "programs" for private groups under the taskforce's umbrella: top 500 private groups, high wealth private groups, and medium and emerging private groups. The expansion that will perhaps affect the most taxpayers will be the program covering medium and emerging private groups.

Medium and emerging groups

Includes private groups linked to Australian resident individuals who, together with their associates, control wealth between $5m and $50m, and businesses with an annual turnover of more than $10m that are not public or foreign owned and are not linked to a high wealth private group. It is estimated by the ATO that this would cover around 97% of the total private group population.

The ATO will use data matching and analytic models to identify wealthy individuals and link them to associated entities, which will then be grouped and looked at as a whole. The main aim of the program is to understand the businesses and the operating environments to identify trends and specific risks that will be used to mitigate tax risks.

For example, once an issue has been identified, the ATO may contact individual companies about its concerns, or it may publish public advice or guidance on the issue if it is an issue that affects a large proportion of businesses.

Aside from the general advice, the ATO has also flagged using early engagement and pre-lodgement agreements with businesses in this category for commercial deals to provide certainty on significant transactions and events. Of course, the ATO will continue to conduct risk-based reviews and audits where it deems appropriate. Initially, the ATO will focus on larger and "higher risk" private groups, those experiencing rapid growth, looking to expand offshore, or where the controlling individuals are transitioning to retirement.

High wealth private groups program

Includes Australian resident individuals who, together with their associates, control wealth of more than $50m. The ATO will take a one-on-one tailored engagement approach to mitigate tax risks.

Top 500 private groups

Focuses on Australia's largest private groups and involves regular one-on-one engagements to understand the business, drivers and risk position.

Businesses or groups that are captured under these programs will be sent a notification letter detailing what needs to be done to prepare for ATO engagement. Characteristics that may attract further ATO scrutiny include tax or economic performance not comparable to similar businesses, low transparency of tax affairs, large/one-off or unusual transactions (eg shifting wealth), aggressive tax planning, lifestyle exceeding after-tax income, accessing business assets for tax-free private use, and poor governance/risk management.

Want to find out more?

If you are a part of a medium or emerging group and think you may receive a notification letter in the future, we can help you identify the areas of risk and make preventative improvements. If you've already received a notification letter, we can engage with the ATO on your behalf to save you time and unnecessary hassle.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants. 

Rental property deductions have many rules, and the ATO is on the lookout for incorrect claims. Some expenses can be deducted immediately, while others will need to be claimed over time. Stay on top of the rules and avoid ATO headaches this tax time.

Did you know that a random audit by the ATO last year revealed nine out of ten rental property owners made a mistake with their rental deductions? We share some tips on what you can and can't claim.

This article assumes you own a 100% rental property (with no private use) that is rented out, or genuinely available to rent, at commercial rates. You'll generally only be able to claim a portion of your expenses if:

  • you have a dual-use holiday home;
  • you sometimes rent out your home on Airbnb;
  • your property is leased at "mates' rates" to friends and family; or
  • your property is sometimes not available for rent.

Purchase expenses

Buying an investment property carries a host of upfront expenses, but not all of these are deductible straight away.

Stamp duty is not deductible, and neither are conveyancing or legal fees for the purchase.

Instead, these expenses will be included in the asset's "cost base" for capital gains tax (CGT) purposes when you later sell the property, which effectively reduces the size of your capital gain.

On the other hand, ongoing land tax (and other charges like council and water rates) are deductible. Legal fees you incur later may also be deductible if they relate to things like evicting a tenant or suing for loss of rental income.

Another trap that can arise is initial repairs. If you need to remedy damage that already existed when you bought the property, the repair costs are not immediately deductible in the year you incur them. Instead, these can be claimed gradually over time as capital works deductions (or sometimes as depreciating assets).

You also can't deduct costs associated with selling the property, like advertising and conveyancing expenses (which instead form part of the asset's CGT cost base). You can, however, claim advertising costs for finding tenants while you own the property.

Repairs or improvements?

While initial repairs aren't immediately deductible, ongoing repairs and maintenance costs for damage and wear that arises while the property is leased (or available for lease) are deductible in the year you incur them. This includes costs not only to remedy direct damage or deterioration, but also for preventative maintenance to keep the property tenantable, such as oiling a deck. Gardening, lawn-mowing, cleaning and pest control are also deductible.

It's vital to distinguish between a repair and an improvement. This is because unlike ongoing repairs, improvement costs are not immediately deductible. The ATO says that if the work doesn't relate directly to wear and tear (or other damage) from leasing the property, it's not a repair. Examples of work that isn't a "repair" but more likely an improvement include:

  • Replacing an entire structure when only part of it is damaged.
  • Replacing a damaged item with something that's better and changes its character (eg replacing a broken plaster wall with a brick feature wall).
  • Renovations or additions to make the property more desirable or valuable.

Some improvement costs are claimed over time as capital works deductions (where they are structural improvements) and in other cases as capital allowances (where they involve a depreciating asset such as carpets, timber flooring and curtains). Note that new rules from 2017 restrict deductions for depreciating assets already used in second-hand residential investment properties at the time of purchase. Your tax adviser can help you navigate these and other complex rules about capital deductions.

Interest expenses

Are you paying off a loan for an investment property you've purchased? The ATO says over-claimed interest is a common error made in rental property expense claims. Find out when you can deduct your interest payments and other associated loan costs, and stay on top of the rules this tax time.

The general rule is that you can deduct interest expenses on a loan you've taken out to buy the property to the extent the property is used for generating rental income. You can generally deduct these interest expenses in the year you incur them.

You can also deduct interest expenses on loans to fund repairs and renovations, or to purchase depreciating assets (eg an air conditioner).

But beware: traps arise when you start mixing private uses with income-producing uses. This occurs if:

  • you use the property for private purposes – even to a small extent – in addition to renting it out; and/or
  • you use part of the loan for private purposes (eg to buy a car or pay for personal living expenses). This includes where you're ahead on your loan repayments and redraw available amounts to fund private expenses.

In these cases, you'll only be able to claim a portion of your interest expenses. You'll need to keep records to substantiate what portion is private and what portion is rental property-related.

When you make a loan repayment, the ATO considers it to be apportioned across both private and rental purposes. (That is, you can't "cherry-pick" by earmarking some repayments as related to the "private" part of the loan and others as "rental"-related.)

It's important your claim stacks up because the ATO says over-claimed interest is on its hit list of common mistakes it's watching for this tax time. The ATO is also concerned about holiday rentals that aren't genuinely available for rent, and properties that are leased out at "mates' rates" to friends and family.

Borrowing expenses

Are you claiming the full range of loan costs you're entitled to? You can deduct costs like loan establishment fees, mortgage brokerage fees and costs of other necessary services that are directly related to taking out the loan for the rental property (such as title searches and property valuations required by the lender).

In some cases, you'll need to carefully distinguish between costs of taking out the loan, and costs of buying the property:

  • Legal services of preparing and lodging mortgage documents are deductible as loan costs, but conveyancing fees for purchasing the property are not.
  • Similarly, any stamp duty on a registered mortgage is deductible, but stamp duty on the purchase of the property is not.

While you can't claim any premiums for insurance you take out to pay out the loan in the event of your death, disablement or unemployment, you can deduct any lender's mortgage insurance that is billed to you by the lender.

Watch out for special timing issues. Unless your total deductible loan costs are below $100, you'll need to claim these costs over five years (or the term of the loan, whichever is the shorter period). And as with interest expenses, you can only deduct a portion of your loan costs if the loan will also be used partly for private purposes. Your tax agent can help you calculate the exact amount to deduct each year.

We'll help you get it right

Whether you're planning finance for a new investment property or already paying off an existing loan, talk to us for expert assistance in planning tax-effective rental property investments and getting your annual deductions right.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants. 

Over 17,000 SMSFs that are heavily invested in one asset class will soon receive a "please explain" from the ATO to check whether they can justify their diversification risk. Diversification is just one of five key matters that all SMSF trustees must regularly review as part of their legally required investment strategy. Know the essential requirements and ensure your fund's strategy is up to scratch.

You've probably heard of the requirement to have an "investment strategy" for your SMSF, but do you really know what's required?

Making an investment strategy is not only a formal legal requirement, but also a useful prompt for SMSF trustees to define their own retirement goals, carefully consider their investments and seek advice if needed. And having a well-reasoned investment strategy will always work in your favour in an ATO audit situation.

So, what exactly is required? There's no prescribed format for what your strategy must look like, but it must be in writing and must be "reviewed regularly".

The ATO recommends reviewing the strategy when a member joins or leaves the fund or when the fund begins paying an income stream to a member, but arguably it should be reviewed periodically even when these events do not occur. Each time you review the strategy, the outcome of your review should be recorded in writing.

By law, SMSF trustees must have regard to all relevant circumstances of the fund when setting the investment strategy. This could include a wide range of factors like the age of the members, their ability to make contributions and their level of risk tolerance. However, there are five specific matters that trustees must take into account. These are discussed below:

(a) Risk

Trustees must consider the risk involved in making, holding and selling the fund's investments, and the likely return they're expected to generate (having regard to the fund's objectives and expected cash flow requirements). Trustees should ask themselves: is this an appropriate level of risk for the members at this point in their lives?

(b) Diversification

How diverse are your SMSF's assets? Trustees must consider whether inadequate diversification will expose the fund to unnecessary risk.

If you've heavily invested in a particular asset or asset type, could a market downturn or other investment risk have a significant adverse effect on the value of member benefits and/or income earned by the fund? The ATO says it's contacting over 17,000 SMSFs that appear to have 90% or more of their fund invested in a single asset class. Therefore, trustees should always be prepared to explain their investment decisions with a well-written investment strategy.

(c) Liquidity and cash flow requirements

Liquidity means how easy it is to sell an asset and convert it to cash. Trustees must consider their liquidity needs in light of the fund's cash flow requirements (see more on "liabilities" below.) If your fund has "lumpy" assets like real estate and minimal cash, this could present a cash flow problem.

(d) Liabilities

Trustees must consider their ability to meet both existing and future liabilities. This would include things like the SMSF's operating expenses, tax liabilities, insurance premiums and costs of managing its assets (eg real estate).

Two important liabilities that trustees often need to consider when planning fund investments are:

  • Income stream payments to members. Once a member commences an income stream, there are minimum amounts that must be withdrawn each year in cash.
  • Loan repayments on any "limited recourse borrowing arrangement" undertaken by the fund to buy an asset.

(e) Insurance

It's possible to hold various types of insurance within superannuation, including cover for death, total and permanent disablement, temporary incapacity and terminal medical conditions. The trustees must consider whether the SMSF should hold cover for its members, which requires the trustees to consider the particular circumstances of the members.

Does your strategy stack up?

The ATO's warning about diversification is a timely reminder for SMSF trustees to review their strategies. Contact our office if you have any questions about investment strategy requirements or for assistance documenting your fund's strategy. We can refer you to our independent financial planner to update this for you. 

IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.  

In response to the recommendations of the Banking and Financial services Royal Commission and the ASIC Enforcement Review Taskforce Report, the government has proposed new enforcement and supervision powers for ASIC to restore consumer confidence in the financial system, particularly in relation to financial advice. These new powers include enhanced licencing, banning, warrant, and phone tap powers, all designed to ensure that avoidable financial disasters uncovered during the Royal Commission never repeats again.

While the Banking and Financial Services Royal Commission seems long ago in the minds of many, the people that have been financially affected by dubious practitioners will no doubt carry the scar of mistrust for life. This then, is precisely why the government has introduced new laws which will give ASIC new enforcement and supervision powers in relation to the financial services sector to weed out the "bad apples" and restore consumer confidence.

The new measures seek to strengthen ASIC's licencing powers by replacing the AFS licence requirement that a person be of "good fame and character" with an ongoing requirement that they be a "fit and proper person" at both the time of application and subsequently. This applies to all officers, partners, trustees and controllers of the applicant applying for the AFS licence.

The "fit and proper person" requirement will also apply to existing AFS licensees to ensure that ASIC is able to monitor the controllers of existing AFS licensees, request relevant information, and carry out enforcement action as required.

In working out whether a person is a "fit and proper person" ASIC will consider matters including whether the person has been convicted of an offence in the last 10 years, whether they've had an AFS licence or Australian credit licence suspended or cancelled, and whether a banning or disqualification order has previously been made.

ASIC's banning powers will also be expanded to situations where they have reason to believe that a person is "not a fit and proper person" or is "not adequately trained or is not competent" to:

  • provide financial services;
  • perform functions as an officer of an entity that carries on a financial services business; or
  • control an entity that carries on a financial services business.

In addition, under these new powers, ASIC may also make a banning order against a person that is insolvent under administration, has, at least twice, been an officer of a corporation that was unable to pay its debts, or has, at least twice, been linked to a refusal or failure to give effect to an AFCA determination.

To support these enforcement functions, ASIC's warrant and phone tap powers have been beefed up. It is no longer required to forewarn those under investigation that it may apply for a search warrant. It is also no longer required to specify the exact books or evidential material that can be searched and seized. Interception agencies (ie police, ASIO, and anti-corruption bodies) will be able to provide ASIC with lawfully intercepted telecommunications information in some instances and ASIC staff will be able to use and record the received information as well as communicate the information to another person in investigations and prosecutions.

All of which means that there will be a decreased risk of evidence destruction or alteration. If these measures become law, ASIC's ability to launch and progress investigations to protect consumers from dodgy practitioners will be greatly enhanced. Ensuring that avoidable financial calamities uncovered during the Royal Commission that ruined so many lives will never be repeat again.

Want to find out more?

If you would like to keep up-to-date with the latest developments in financial services and the outcomes from the Banking and Financial Services Royal Commission, contact us today.  

IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.  

Previously, it was thought that any benefit provided directly or indirectly to members or related parties of an SMSF from an investment would contravene the sole purpose test. However, a Full Federal Court decision has reframed the sole purpose test which will provide some flexibility to trustees on certain investments. Notwithstanding this decision, investments in SMSFs remain a complex area with many pitfalls and getting it wrong could mean the fund loses concessional tax treatment along with civil and criminal penalties for trustees.

To be eligible for superannuation fund tax concessions, SMSFs are required to be maintained for the sole purpose of providing retirement benefits to members, it is what is known as a sole purpose test (s 62 of the SIS Act). Failing the test could expose trustees to civil and criminal penalties in addition to the SMSF losing concessional tax treatment. Therefore, it is important when making SMSF investments that the investment does not provide a benefit directly or indirectly to members or related parties.

Whether a fund's investment contravenes the sole purpose test by providing a benefit directly or indirectly to members or related parties depends entirely on the circumstances of each case. Recently, the Full Federal Court decided that an SMSF investment in a fund to acquire a fraction interest in a property to be leased at market rent to the member's daughter did not breach the sole purpose test.

The Full Court said s 62 does not suggest that an SMSF will not be maintained solely for the core and/or ancillary purposes simply because the trustee enters into a transaction with a related party. It noted that the property was to be leased at market rent therefore there was no current day financial benefit to be obtained by either the member or his daughter. The only benefit would be some comfort or convenience, which was considered to be merely incidental.

However, the Full Court said if the lease was not at market rent, then an inference could readily be drawn that the fund was being maintained for a collateral purpose of providing discounted housing to a relative, which would contravene the sole purpose test.

In response to the Court's decision, the ATO noted that a trustee of an SMSF could potentially breach the sole purpose test by investing in the fund mentioned in the case if the facts and circumstances indicate that the SMSF was maintained for the collateral purpose of providing accommodation to a related party. Which will be determined by considering all the facts and circumstances surrounding the trustees' behaviour.

Nevertheless, to provide certainty for the investors in this particular fractional property investment, the ATO said it will not take compliance action if the trustee signs a declaration that avoids (ie the Sole Purpose Test Declaration):

  • entering into an investment based on its potential to provide related-party accommodation;
  • influencing the fractional property investment fund or a relevant property manager to engage a related party as a tenant of the property; and
  • influencing a related party to become a tenant of the property.

In addition, a copy of this declaration must be retained and provided to approved auditors. The ATO must also not find evidence that indicates the trustee has acted inconsistently with the terms of the signed declaration.

The takeaway lesson from this case is that SMSFs are complicated, and investments in SMSFs even more so. It should be noted that while the Full Court found the SMSF had not breached the sole purpose test, it ultimately ruled against the trustee as it found that the investment was an in-house asset and breached the 5% limit. Crucially, the ATO warned it may still apply compliance resources to scrutinise whether an SMSF investment in fractional property investments contravenes other provisions of the SIS Act (eg in-house asset rules).

Confused?

If you're the trustee of a super fund and are not sure about whether an investment you've made may have breached the sole purpose test, we can help you find out. If you're confused about in-house asset rules or any other aspects of SMSFs we can explain it to you in simple to understand terms, contact us today.

IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants. 

Salary sacrifice strategies are a great way to boost retirement savings. But unwelcome loopholes in the law prior to 1 January 2020 meant some workers may have been getting less than they bargained for. Fortunately, the government has taken action to fix this. 

From 1 January 2020

From 1 January 2020, salary sacrificed super contributions can't be used to reduce your super guarantee obligations, regardless of the amount your employee elects to salary sacrifice.

This means the salary sacrificed amount does not count towards your super guarantee (SG) obligations. A further change is that the super guarantee will be 9.5% of the employee's ordinary time earnings base. The base is the sum of:

  • the employee's OTE
  • the amount salary sacrificed from the employee's OTE.

Prior 1 January 2020

Prior to 1 January 2020, there were salary sacrificing loopholes that could adversely affect your retirement savings plans. Most workers understand that their employer must make compulsory super guarantee (SG) contributions of 9.5% of their salary and wages. However, things get a little tricky when an employee chooses to salary sacrifice – and it could have unintended consequences.

Under laws that existed prior to 1 January 2020, employees who sacrifice some of their salary in return for additional super contributions may end up receiving less than they expected because of the following two legal loopholes:

  • Employers may choose to count the salary sacrifice contributions they make towards satisfying their obligation to make minimum SG contributions of 9.5%.
  • Additionally, employers may calculate their 9.5% contributions liability based on the employee's reduced salary after deducting sacrificed amounts, rather than the pre-sacrifice salary.

The following example demonstrates how the old laws could have adversely affected a worker's savings strategy:

Kayla earns $100,000 p.a. from her employer. This means she's entitled to compulsory SG contributions of 9.5% of her $100,000 salary (ie $9,500). She therefore earns total remuneration of $109,500.

Kayla now arranges to salary sacrifice $10,000 of her salary as extra contributions, reducing her salary to $90,000. But under old laws, her employer was only required to make compulsory SG contributions of 9.5% of $90,000 (not $100,000), ie $8,550.

Another problem was that her $10,000 salary sacrifice contributions could count towards her employer's obligation to pay SG contributions. She could receive only $10,000 in total contributions plus $90,000 salary (meaning total remuneration of $100,000) and her employer wouldn't be in breach of SG laws.

When Kayla entered this arrangement she was expecting to receive contributions of $9,500 plus $10,000, a total of $19,500, while maintaining total remuneration of $109,500 (ie $90,000 salary plus $19,500 contributions). Clearly, the old laws produced a bad outcome for Kayla.

These loopholes possibly existed because salary sacrificing was not a widespread strategy when the SG laws were written.

In practice, many employers were not taking advantage of the loopholes and were instead honouring the employee's intended contributions strategy.

However, evidence suggests some employers were applying the rules differently. They may even do this inadvertently through their payroll processes.

A fix is now law from 1 January 2020

New laws apply from 1 January 2020 to close the loopholes by requiring employers to pay compulsory SG contributions at 9.5% of the pre-sacrifice amount of salary (that is, the salary actually paid to the employee plus any sacrificed salary). Further, any salary sacrifice contributions will not count towards satisfying the employer's obligation to make compulsory SG contributions.

What should workers and employers do?

The new laws will only apply to quarters beginning on or after 1 January 2020. All salary-sacrificing workers should check their arrangements now to ensure they're receiving the full intended benefit of the arrangement. They may need to specifically check the amounts going into their fund.

Employers should also ensure their payroll is compliant from 1 January 2020.

Review your salary sacrifice arrangement

Now is a good time to check that your retirement savings plan is on track. Contact us for assistance in checking your current arrangement or approaching an employer who may be paying less than you expect. We can also help you review your affairs to ensure you're implementing the most tax-effective sacrificing strategy.

Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.

Happy New Year! With all the pandemonium of the holiday season, your super is probably the last thing on your mind. However, this is precisely the right time to think about implementing some strategies to increase your super for the coming year. With some simple, no-cost strategies such as finding your lost super, consolidating your super accounts, and making sure you're in a fund that's performing well, you will be well on your way to a comfortable retirement.

Among all the chaotic festivities of the holiday season, our thoughts may turn to goals and resolutions achieved during 2019. Career successes, reaching fitness goals and life milestones are all causes for celebration. While most of us wouldn't even think twice about our superannuation, now is the perfect time to put some resolutions in place to increase your super for 2020. After all, it is what we'll be relying on in retirement, and even small improvements now could mean extra luxuries later.

Building up super doesn't always have to mean making monetary sacrifices now, there are some simple solutions to making sure you're getting the most out of super at no cost. Strategies include finding your lost super, consolidating your super accounts, and making sure you're in a quality fund in terms of performance.

Currently, there are 5.8m individuals (36% of the population) with 2 or more super accounts. Every year, the ATO launches its postcode "lost super" campaign to help raise community awareness of lost super. As a consequence of the 2018 campaign, more than 66,000 people to find and consolidate over 105,000 accounts worth over $860m. For this year's campaign, the ATO has created tables of lost and unclaimed super per state and postcode that anyone can access.

If you think you've got lost super, you can then log into myGov to claim the lost super and have it consolidated with your active account.

Finding and consolidating your lost super with your active account means you'll pay less management fees and other costs, saving you in the long term. Between 1 July 2014 and 30 June 2019, 2.6 million accounts to the value of $15bn have been consolidated by fund members using ATO online services. This includes 540,000 accounts to the value of $4.4bn that were consolidated in the past year. The figures indicate that more and more people are taking advantage of this no-cost strategy to grow their super in the long term.

Another easy way to grow your super is to make sure the super fund that you're putting your money into is performing well. Recently, the regulator of super funds, APRA, released "heatmaps" that provide like-for-like comparisons of MySuper products across 3 key areas: investment performance, fees and costs, and sustainability of member outcomes. The heatmap uses a graduating colour scheme to provide clear and simple insights that unlike a sea of numbers on a spreadsheet, will send a clear and strong message to users.

For example, MySuper products delivering outcomes below the relevant benchmarks in relation to investment performance and fees and costs will be depicted from pale yellow to dark red. The sustainability measures provide an indication of a trustee's ability to provide quality member outcomes and address areas of underperformance. While the ultimate purpose of the heatmap is to have trustees with areas of underperformance take action to address it, they can also be an invaluable resource in choosing the right super fund.

Need help?

Think you may have lost super? Perhaps you'd like to consolidate your multiple super accounts into one? Or maybe you'd just like to find out whether your super fund is performing at the right level for your retirement? Contact us if you need assistance.

IMPORTANT: This communication is factual only and does not constitute financial advice. Please consult a licensed financial planner for advice tailored to your financial circumstances Email us at Robert Goodman Accountants at reception@rgoodman.com.au.  © Copyright 2020 Thomson Reuters. All rights reserved. Brought to you by Robert Goodman Accountants.  

Merry Christmas 2019!!

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We are closed for Christmas from 5pm 20th December 2019 reopening at 8:30am 6 January 2020

We truly appreciate and value your continued loyalty and support.  

Have a very Merry Christmas and a Happy and prosperous 2020

Our office is closed from 2pm to 5pm Tuesday 10 December for our Christmas Party. Please email us at reception@rgoodman.com.au  or for urgent queries please call Liz Gibbs on 0416 018 956.